Tuesday, March 31, 2009

Can Capitalism Really Reform Itself?

It has lately become a target of populist anger due to the policymakers’ inability to rein in on financial executive excesses, but is it possible for capitalism to reform itself?

By: Vanessa Uy

Ever since that AIG executive bonus debacle received round the clock press attention, populist anger in America and across the world has now been directed at the excesses of capitalism. Not to mention the Bernard L. Madoff’s hedge-fund-as-a-pyramid-scheme financial scandal and Sir Allen Stanford’s equally dubious investment scheme. The state of the global economy – as of late – has now turned into an issue as politically polarizing as that of religious extremism. But given that every head-of-state around the world are now pledging to do their part to reform the excesses that plagued capitalism since back in the days when Ronald Reagan ruled the free world, is it really possible to reform capitalism – or create policies to make capitalism reform itself?

The G-20 Summit in London, England has been touted by British Prime Minister Gordon Brown of rising to the challenge to reform capitalism for the better. With the promise to reform the world’s financial system through international regulations and tighter controls of hedge funds and mortgaged backed securities, as it’s main goals. There is literally a lot of money riding on the G-20 Summit in London. Though the warm-up protests last Saturday March 28, 2009 only highlights the concern that now capitalism really is the target of global populist anger. But the question now is whether our “enlightened” world leaders choose quantitative easing at the expense of their citizen’s economic well-being – or will there be a repeat of 1999’s Battle in Seattle?

The problem with our existing capitalist framework of our global economy is that it is very dependent on the existence of financial disparity between populations – i.e. it only works if there are poor people working for the rich people. And this is the very reason why the world’s “significant” population of multi-millionaires and billionaires are extremely reluctant to commit to “Going Galt” – i.e. mimicking John Galt of Ayn Rand’s Atlas Shrugged where ├╝ber-rich people formed their own commune in a secluded island. Imagine billionaires employing multi-millionaires as gardeners and landscapers. Or how about multi-millionaires peddling 5-dollar MSRP (manufacturer’s suggested retail price) devilled eggs and selling them to their billionaire customers at 30 thousand dollars for starters. Maybe Karl Marx and W.E.B. DuBois were right in stating that capitalism cannot reform itself. Or as I see it – capitalism is extremely reluctant in reforming itself. Even if it means it’s very survival is at stake.